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PNB Housing terminates Rs 4,000 cr fund-raising deal with Carlyle-led group

PNB Housing terminates Rs 4,000 cr fund-raising deal with Carlyle-led group

At a meeting held today, the board decided not to proceed with the preferential issue and the share subscription agreements executed with the Proposed Allottees have been terminated, says the company.

Punjab National Bank. Photo: Reuters Punjab National Bank. Photo: Reuters

Punjab National Bank Housing Finance Ltd, a subsidiary of state-owned Punjab National Bank, in a stock exchange filing today said its board has terminated a Rs 4,000 crore deal with US-based Carlyle group-led group of investors.

"At a meeting held today, the board decided not to proceed with the preferential issue and the share subscription  agreements executed with the Proposed Allottees have been terminated in accordance with their respective terms," PNB said in a stock exchange filing.

The PNB Housing Finance said its board has been informed that consequently Pluto Investments, which is a Carlyle entity, will be initiating the process to withdraw the open offer made by them  (at Rs 403.22 per share).

The PNB Housing Finance said the proposed preferential issue has been held up for over four months (after already having taken over two years), due to the pending legal proceeding before the Securities Appellate Tribunal (SAT).

It said there continues to be "no visibility or certainty as to  the timeline for judicial determination of the legal issues, in  particular as a third member of the SAT is yet to be appointed".

The board noted that due to the protracted litigation and the  continuing interim order of the SAT dated June 21, 2021, there is  no clarity on the shareholders' approval for undertaking the preferential issue.

"In addition, regulatory approvals required for the preferential  issue, are pending and it is unclear whether such approvals will  be forthcoming while the legal proceedings are ongoing," said PNB Housing. It said therefore, its capital raising plans will be delayed and such uncertainty will continue.

The Securities and Exchange Board of India (SEBI) in June this year had instructed Punjab National Bank Housing Finance (PNBHF) to halt its proposed Rs 4,000 crore deal with Carlyle Group.

In a rare regulatory move, the capital markets regulator restrained the housing finance company from going ahead with shareholders' voting on the deal, directing it to conduct the valuation process as per the relevant applicable legal provisions.

The deal, which came under SBI and RBI's lens, following concerns expressed in certain quarters, including by a proxy advisory company, would have ultimately seen the US-based private equity giant Carlyle Group taking control of PNB Housing Finance.

Proxy advisory firm Stakeholders Empowerment Services (SES), in its report, had raised a number of questions on the proposed deal, wondering if Punjab National Bank (PNB) has willingly surrendered control without extracting a fair compensation.

Also read: SEBI halts Rs 4,000 cr Carlyle-PNB Housing deal